2020 (12) TMI 787 - HC - GST

Principles of Natural Justice - Refund of CGST - petitioner would point out that, without affording sufficient opportunity of hearing to the petitioner, the said order has been passed rejecting the petitioner's application for refund - HELD THAT - Admittedly, no hearing was afforded to the petitioner by the second respondent before passing of the impugned order dated 27.03.2019 rejecting the petitioner's application for refund. As seen from Rule 92(3) of the Central Goods and Services Tax Rules, 2017e, it is clear that any application for refund can be rejected only after affording sufficient opportunity of hearing to the party, who seeks for refund. The first respondent in the impugned order dated 20.08.2020 has also confirmed that no hearing was afforded to the petitioner by the second respondent and despite the same, has dismissed the appeal erroneously. When Rule 92(3) of the CGST Rules, 2017, makes it clear that hearing is mandatory before rejecting any application for refund, the second respondent as well as the first respondent in their respective impugned orders have arbitrarily and by total non application of mind to the said Rule has rejected the petitioner's application for refund. The matters are remanded back to the second respondent for fresh consideration and the second respondent shall pass final orders on the refund application dated 27.03.2019 submitted by the petitioner on merits - Petition allowed by way of remand.

Summary

Issues:
Challenge to Order in Appeal confirming rejection of refund application under CGST Rules, 2017 without affording hearing to petitioner.

Analysis:
The writ petition challenged the Order in Appeal confirming the rejection of the petitioner's application for refund under the Central Goods and Services Tax Rules, 2017. The petitioner contended that Rule 92(3) of the CGST Rules required the second respondent to hear the petitioner before rejecting the refund application. It was argued that the second respondent passed the rejection order without providing adequate opportunity for the petitioner to be heard. The Appellate Authority failed to remand the matter back to the second respondent for fresh consideration despite acknowledging the lack of hearing. The petitioner emphasized that the failure to grant a hearing violated Rule 92(3) of the CGST Rules, 2017.

The Court noted that Rule 92(3) of the CGST Rules mandates that no refund application should be rejected without giving the applicant an opportunity to be heard. The first respondent's order confirmed that no hearing was granted to the petitioner by the second respondent, yet the appeal was dismissed. The Court observed that both the second respondent and the first respondent had disregarded the requirement of providing a hearing before rejecting the refund application. Consequently, the Court ruled that the petitioner's refund application must be reconsidered on its merits in compliance with the law, ensuring the petitioner is given a fair hearing by the second respondent.

Therefore, the impugned orders dated 27.03.2019 and 20.08.2020 were quashed, and the matters were remanded to the second respondent for fresh consideration. The second respondent was directed to make a final decision on the refund application within twelve weeks from the date of receipt of the court's order, ensuring the petitioner's right to a fair hearing. The writ petition was disposed of without any costs being imposed.